CME's Duffy: new U.S. perpetual futures 'disaster waiting to happen

The chief executive of the world's largest futures exchange issued a broad rejection of the first U.S.-approved perpetual futures contracts on Thursday, warning the products could expose retail traders to leverage well beyond what CME-listed markets offer. Terry Duffy, chairman and CEO of CME Group, said at the Piper Sandler Global Exchange & Fintech Conference that perpetual futures in some offshore markets trade with leverage ranging from 20x to as high as 250x, compared with CME's roughly 5x framework on crypto products.

"I have grave concerns with the way these contracts are set up," Duffy said at the conference. "I don't like to see people that don't understand products to potentially get blown out of a contract that they shouldn't be in the first place."

Duffy compared current market behavior to conditions ahead of the 2008 financial crisis. "I really believe it's 2007," he said. "The housing market has been supplanted by the speculation market, including predictions and everything else, and this could be a disaster waiting to happen."

Duffy's remarks came days after the Commodity Futures Trading Commission approved the first perpetual futures contracts tied to cryptocurrency prices. Kalshi, a prediction market platform, listed the contracts on May 29. Perpetual futures allow traders to take leveraged positions on an asset's price without an expiration date, unlike traditional futures, which settle on a defined maturity.

Offshore venues still handle the lion's share of global perp trading activity. Hyperliquid accounted for 6.6% of monthly perpetual volume in May, according to data from The Block. HIP-3, its builder-deployed perpetual framework, generated more than $62 billion in volume that month.

CME Group and Intercontinental Exchange previously urged the CFTC to examine offshore perpetual futures markets as the structure gained traction outside traditional exchanges. Several U.S. exchanges have also explored launching similar products.

Duffy also criticized the CFTC's approval process, saying he disagreed with the agency's decision to permit the contracts. He said the review concluded in less time than a standard self-certification window, which allows listing after 24 hours, absent objections. "I totally disagree with the government, and I'll deal with it as we need to move forward," Duffy said at the conference.

In a separate interview, Duffy said he contacted CFTC Chair Michael Selig on the day of approval to express concern, Bloomberg reported.

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